In Focus: Energy prices a "bright spot" in gloomy economy


After hitting record highs this year, energy prices began declining in June, providing the economists with a "bright spot" amid the gathering gloom by fuelling a "broad rally" in worldwide stock markets, according to reports.

The New York Times states the price of oil, which hit a record $145.29 a barrel on July 3rd, has declined by 16 percent since then while petrol has come back under the $4 a gallon barrier.

Meanwhile, natural gas prices - which experienced the fastest rises in the energy sector this year - have dropped by one-third since the start of July.

These falls have spurred investors and prompted some analysts to predict the declines could last until the end of 2008 as worldwide demand softens, the publication notes.

However, commodity prices are still "extraordinarily high" by historical standards and some economic experts have warned that events such as a hurricane in the Gulf Coast or ramped up tensions in the Middle East could see prices quickly climb again.

Bernard Baumohl, chief global economist for the Economic Outlook Group, said: "Just as abruptly as they have fallen, oil prices can rebound because of geopolitical factors."